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0 pointszipy1241mo ago0 comments

P/E is not an indicator of available to deployed capital. Just in the EU alone there is about €12 trillion in bank deposits which could be invested. There is no lack of liquid capital to be invested.

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6 comments · 2 top-level

pjc501mo ago· 4 in thread

Basel capital rules are supposed to mitigate against the insane idea of banks deploying all their capital in a single high risk stock.

If you think you can get all the _public_ to pull their short term bank deposits into stock .. well, (a) you've not met the Germans, and (b) that is how the economy of Albania collapsed in a pyramid scheme.

Imustaskforhelp1mo ago

> Basel capital rules are supposed to mitigate against the insane idea of banks deploying all their capital in a single high risk stock.

At the same time of these companies IPO'ing, they are also trying to bend the rules of the index funds and their markets (Nasdaq,S&P 500) so that they can get listed into these index funds asap.

And when these happens at such obscene levels, what happens is that a very sizable chunk of the S&P will get into these companies (5-10% is a very large number for a single company especially such companies within these index funds IMO)

and their whole plan is that then banks and other investments sitting on cash would then invest in it. Oh by the way, your retirement funds might also be linked to it all.

The fact is that there is a race with multiple companies (SpaceX,Anthropic,OpenAI) all trying to IPO and get listed on the stock markets as soon as possible.

nothercastle1mo ago

It’s bad but not as bad as it seems. To get these insane valuations companies are selling very low float. A lot of indexes won’t list them at under 10% float and even if they do only at a float multiplier so spacesx as a 100b component (2 billion x 5% float) See this podcast for a better explanation https://podcasts.apple.com/us/podcast/the-rational-reminder-...

paulryanrogers1mo ago

Should be illegal. There should be a cool off period before new stocks get auto added to indexes.

zipy124OP1mo ago

I'm not suggesting the banks invest. But that individuals could withdraw money to invest. All I am saying is there is still lots of 'dry powder' left in the financial system. There is no shortage of liquid cash to invest, only places to put it.

0xDEAFBEAD1mo ago

There is the amount of capital which is technically available, and the amount of capital which is available in practice.

If EU depositors want exposure to US AI firms, why didn't they already withdraw their money to invest in Microsoft/Google/etc.? I'm a bit doubtful that an OpenAI IPO is going to trigger major shifts in asset allocation.

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